China’s environmental revolution

In 2015, China accelerated the tightening of its environmental regulations in the face of increasing levels of air, soil, and water pollution. The government has also taken a much more proactive approach towards strict enforcement. This has had a huge impact on the chemical industry in China, with plant closures and tightened capacity leading to reduced supply and increased prices. Anne Helenius-Heir, VP EHSQ, Stuart Collecutt, senior manager EHSQ APAC, and Hanspeter Enzmann, VP manufacturing APAC P&P, reflect on what this means for the industry – both in China and around the world.

Pollution in China, particularly in the more developed eastern areas of the country, reached record levels some years ago. Before 2015, although there were environmental laws in place, enforcement was sporadic and compliance among local operators was patchy at best. Recently there has been much stricter enforcement alongside a tightening of legislation, leading to non-compliant chemical manufacturing sites being shut down across the country.

There have also been country-wide production shutdowns when emissions levels have got too high – affecting compliant and non-compliant companies alike. “The impact can be seen throughout the value chain,” points out Hanspeter Enzmann. “Even if your company is compliant you still can be shutdown, which reduces the incentive to invest in compliance for non-responsible players. Also, if you are not directly shutdown you may still be affected by factors like transportation limitations, raw material supplier shutdowns, or customer shutdowns.”

From high pollution to Western-style regulations

“Chinese environmental regulations are making a big leap towards Western regulations,” explains Anne Helenius-Heir. “Carbon taxes are being brought in along with strict environmental impact assessments before sites can expand. The country now has some of the strictest emissions regulations in the world, similar to those seen in Europe and North America – but rolled out on a much shorter timescale.”

“The regulations are also being enforced more rigorously than before,” Stuart Collecutt points out. “Whether you’re opening a new plant or expanding an existing one, you have to work through all the environmental approvals covering emissions to air, soil, and water. There have been some very stiff jail sentences handed out to rulebreakers and large financial penalties in the case of severe non-compliance. This positive development has the unfortunate side-effect of paralysing authorities in the face of approving anything, which consequently delays development.”

Adjustment is needed across the industry

“This process is happening too fast for the whole value chain to react in a timely way,” points out Enzmann. “For example, reduced air or water pollution means more waste held back in production, but there are not enough waste treatment capacities available to deal with the additional waste. Permits for these companies have not been granted or have been delayed for years. This has led to a situation where plants have to stop production or pile up waste onsite and hence fall into non-compliance. However, this has focused producers on finding ways to reduce waste volumes and make their production cleaner.”

The chemical industry will have to adjust, and in a very short timeframe.

“The authorities are also now stricter about enforcing what is and what isn’t considered waste, particularly in terms of what is classed as hazardous waste and how it should be stored, transported, and disposed of,” adds Collecutt. “The chemical industry will have to adjust, and in a very short timeframe.”

Kemira in China

“We have three manufacturing sites in China, with the third due to start operations next year, mainly producing chemicals for the pulp and paper industry,” shares Collecutt. “All three of them are in industrial parks and meet international standards, such as the environmental standard ISO 14001 and other relevant certifications including occupational health and safety standard OSHAS 18001 and quality standard ISO 9001. We have always operated our Chinese sites in line with Kemira’s global environmental, health, and safety standards, including our prevention and reporting programs. These are the same in Finland as they are China – and indeed all over the world. When new laws are introduced or existing laws modified, Kemira pays close attention and allocates sufficient resources to implement corrective measures and achieve compliance within the given time frame.”

The bottom line is that customers improve their own sustainability with our approach .

“Kemira’s customers in China are predominantly papermakers,” points out Enzmann. “By guaranteeing our high production and product standards, our customers improve their situation because they are using more sustainable products. In addition, Kemira provides services to support our customers to reduce their raw material consumption, better combine products to increase efficiency, or suggest alternatives to replace more polluting products. The bottom line is that customers improve their own sustainability with our approach.”

Looking to the future

“Overall, I am convinced China is going in the right direction here,” sums up Enzmann. “In the long run companies that are environmentally responsible and legally compliant will survive, while those that are not will cease to operate. This is good for society and good for the markets. China is no longer the low-cost work bench of the world through jeopardizing the environment; it will become the largest economy in the world and remain the target growth market for many companies – China is too big and too important to be neglected. Sustainability in all aspects will be the key to success.”